Friday, October 30–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly down overnight. U.S. stock indexes are set to open the New York day session solidly lower. It’s a risk-off trading day Friday, on this last trading day of the week and of the month. Some mostly as-expected but still uninspiring high-technology stocks’ earnings reports this week, rising Covid-19 infections in major industrialized countries that are prompting new restrictions on businesses, and the upcoming U.S. elections have traders and investors pulling in their horns today. Risk aversion could become keener on Monday and Tuesday, as next Tuesday’s U.S. elections will be the major focus of the global marketplace next week. Several global health officials have told the public in the Northern Hemisphere to expect a “dark winter,” with other officials warning Covid’s grip on the world, including its damaging economic implications, won’t abate until 2022.
In overnight news, Germany, the workhorse of the European Union, saw its GDP rise a better-than-expected 8.2% in the third quarter from the second quarter, but still down 4.3%, year-on-year.
The important outside markets early today see the U.S. dollar index a bit weaker on a mild corrective pullback after strong gains this week that pushed the index to a four-week high on Thursday. Nymex crude oil prices are slightly lower early today and hit a 4.5-month low on Thursday, presently trading around $36.00 a barrel. The breakdown in crude oil prices this week, which produced serious near-term technical damage on the charts, is a significantly bearish omen for the entire raw commodity sector. The yield on the benchmark U.S. 10-year Treasury note is 0.82% today.
U.S. economic data due for release Friday includes personal income and outlays, the employment cost index, the ISM Chicago business survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading and hit a five-week low overnight. Bulls have lost their near-term chart advantage as a big and bearish double-top reversal pattern has formed on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 3,300.00 and then at Thursday’s high of 3,333.75. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,226.00 and then at 3,200.00. Wyckoff’s Intra-day Market Rating: 3.5
December Nasdaq index futures: Prices are lower and hit a five-week low in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 11,300.00 and then at 11,400.00. On the downside, shorter-term support is seen at the overnight low of 11,039.50 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) neutral early today. Shorter-term technical resistance is seen at the overnight high of 173 19/32 and then at 174 even. Shorter-term support lies at this week’s low of 172 20/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are slightly up in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 138.19.5 and then at 138.24.0. Shorter-term technical support lies at this week’s low of 138.11.0 and then at the October low of 138.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are near steady in early U.S. trading. Bulls have faded this week. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1705 and then at Thursday’s high of 1.1769. Shorter-term support is seen at this week’s low of 1.1661 and then at the September low of 1.1630. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly up in early U.S. trasding. Prices Thursday hit a 4.5-month low. Prices this week have seen a bearish downside “breakout” from a sideways trading range this week. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $37.00 and then at Thursday’s high of $37.76. Look for sell stops just below technical support at $36.00 and then at this week’s low of $34.92. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are mixed to firmer in early U.S. pre-market trading. Bulls are working to stabilize the grain markets after this week’s solid losses. Risk-off attitudes and profit taking from recent gains have hit the grain futures. Grain market bulls still have the overall near-term technical advantage as price uptrends are still in place on the daily charts. However, the big breakdown in the crude oil market this week is a significantly bearish omen for all raw commodity markets, including the grains.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff